The Toyota Way by Jeffrey Liker

14 Management Principles from the Worlds Greatest Manufacturer

Tedd Snyder Snyder Consulting & Associates tfsnyder@teddsnyder.com

MAQIN Lean and Six Sigma Special Interest Group May 19, 2004

Toyota History
1894 - Sakichi Toyoda, a tinkerer and inventor, begins making

manual looms. 1926 Toyoda opens Toyoda Automatic Loom Works. He later invents looms that stop automatically when thread breaks (jidoka). 1937 - Kiichiro Toyoda, an engineer, opens Toyota Motor Company. Visits Ford and GM during the 30s. 1945 - Toyoda challenges company to catch up to US in 3 years. 1948 - Toyotas debt is 8 times its capital value. 1950s Toyota studies US plants, including Ford, and supermarkets during a 12 week study visit. They see little improvement since his trip in the 30s but use supermarkets as a model for just-in-time production.

The Toyota Approach : 4Ps

Continuously solving root PROBLEMS Add value to the organization by developing your PEOPLE and PARTNERS

Principles 12-14

Principles 9-11

The right PROCESS will produce the right results

Long Term PHILOSOPHY

Principles 2-8

Principle 1

Toyotas 14 Management Principles

1.

2.
3. 4. 5. 6.

7.
8. 9. 10. 11. 12. 13. 14.

Base your management decisions on a long term philosophy, even at the expense of short term financial goals. Create continuous process flow to bring problems to the surface. Use pull systems to avoid overproduction. Level out workload (heijunka). Build a culture of stopping to fix problems, to get quality right the first time. Standardized tasks are the foundation for continuous improvement and employee empowerment Use visual control so no problems are hidden. Use only reliable thoroughly tested technology that serves your people and processes. Grow leaders who thoroughly understand the work, live the philosophy, and teach it to others Develop exceptional people and teams who follow your companys philosophy Respect you extended network of partners and suppliers by challenging them improve. Go and see for yourself to thoroughly understand the situation. Make decisions slowly by consensus, thoroughly considering all options; implement decisions rapidly Become a learning organization through relentless reflection (hansei) and continuous improvement (kaizen)

Principle 1: Base your management decisions on a long term philosophy, even at the expense of short term financial goals
Have a sense of purpose that supercedes any short term

decision making. Work, grow, align the organization toward a purpose greater than making money. Understand your place in the history of the company and work to bring the company to the next level.
Generate value for the customer, society and the economy.

Evaluate every function in the company in terms of its ability to achieve this.
Be responsible. Strive to decide your own fate. Act with self

reliance and trust in your own abilities. Accept responsibility for your conduct and maintain and improve the skills that enable you to produce added value.

Principle 2: Create continuous process flow to bring problems to the surface

Redesign processes to achieve high value added, continuous

flow.
Create flow to move material and information fast as well as to

link processes and people together so that problems surface right away.
Make flow evident throughout your organizational culture. Case Study Navy yard job summaries

Lead time reduced 63% Distance paperwork traveled reduced 55-92% Number of steps reduced by 67% Handoffs reduced by 80%

Principle 3: Use pull systems to avoid overproduction

Provide your downstream customers in the process with what

they want, when they want it, and in the amount that they want. Toyota studied US supermarkets in the 50s
Pull vs Push (Production Schedule)

Material replenishment initiated by consumption is the basis for just-in-time. Just-in Time - an organized system of inventory buffers. Examples- filling your gas tank, office supplies. Kanban - sign, signboard, doorplate, poster, billboard, cardsignal Rother and Shook in Learning to See

Flow (one piece) where you can and pull where you must.
-

Scheduling still happens, but keep it short (days vs months)

Principle 4: Level out workload (heijunka)

Eliminating Muda is just one third of the equation for making

lean successful. Eliminating Muri and eliminating Mura in production are just as important. Muda (waste) Transportation, Inventory,Movement Waiting, Overproduction, Overprocessing, Defects + Unused employee abilities Muri (overwork), Mura (inconsistency),Heijunka (evenness) AAABBBCCC to ABCABCABC Case study- Gutter manufacturer Lead time reduced by 40% Changeover time reduced by 70% WIP reduced by 40% Inventory obsolescence reduced by 60%

Principle 5: Build a culture of stopping to fix problems, to get quality right the first time

Quality at the source

Jidoka autonomation Andon signal for help

Yellow, then red Team leader fix, figure, pull Segmented assembly line with buffer inventory Freshman job Takt = 57 Touch = 44.7

Poke yoke get rid of mistakes mistake avoidance (example-cotter pin/light curtain) (avoid easy mistakes)

Administrative approaches standardized work and checklists (pilots) (engineering forced to consider alternatives) Toyotas quality process
1. 2. 3. 4.

Go and see Understand the situation One piece flow or andon Ask why 5 times

Principle 6: Standardized tasks are the foundation for continuous improvement and employee empowerment
Standardized work is not the end result, the one best way, it is the

beginning of improvement.
Use stable, repeatable methods everywhere to maintain the

predictability, timing, and regular output of your processes. (This also helps to manage them). It is the foundation of flow and pull.
Standardized work consists of three elements

Takt time Sequence of the process Amount of stock on hand

Capture the accumulated learning about a process by standardizing the

current best practices. Allow creative and individual expression to improve upon the standard; then incorporate it into the new standard.

Principle 7: Use visual control so no problems are hidden

Visual Control The ability to see abnormalities at a glance.

Example - Ask a coworker to see a specific document, item, or something on their computer or the companys intranet. Sort Straighten Shine Standardize Sustain Example email audits

5S

Process Control Boards (daily goals, takt rate, manpower, current

status throughout the day)

Reduce your reports to one piece of paper whenever possible.

E.g. A3 (11x17) Reports (Storyboards) A4 (8 x 11)next!

Principle 8: Use only reliable thoroughly tested technology that serves your people and processes
Use technology to support people, not to replace people. Conduct actual tests before adopting new technology in

business processes, manufacturing systems, or products.

Reject technologies that conflict with your culture or that might

disrupt stability, reliability, and predictability.

Encourage your people to consider new technologies when

looking into new approaches to work. Quickly implement a thoroughly considered technology if it has been proven in trials and it can improve the flow of your processes.

Principle 9: Grow leaders who thoroughly understand the work, live the philosophy, and teach it to others
Grow leaders from within rather than buying them from outside.

(This is an example of applying Heijunka)or constancy of purpose.

Leaders must be role models of the companys philosophy and

way of doing business.

A good leader must understand the daily work in great detail so

they can be the best teacher of your companys philosophy.

Before we make cars (monozukuri), we make people (hito-

zukuri).

Principle 10: Develop exceptional people and teams who follow your companys philosophy
Create a strong, stable culture in which company values and

beliefs are widely shared and lived out over a period of many years. Respect for Humanity system Uses both intrinsic and extrinsic approaches to motivation
Train exceptional individuals and teams to work within the

corporate philosophy to achieve exceptional results. Balance between teamwork and excellent individual work
Use cross functional teams to improve quality and productivity

and enhance flow by solving problems.

Make an ongoing effort to teach individuals how to work

together as team toward common goals. Teamwork is something that has to be learned.

Principle 11: Respect you extended network of partners and suppliers by challenging them improve
Have respect for your partners and suppliers and

treat them as an extension of your company.

Challenge your partners to grow and develop. It

shows that you value them. Set challenging targets and assist your partners in achieving them. (e.g. John Deere, Harley Davidson)

Principle 12: Go and see for yourself to thoroughly understand the situation

Genchi (actual location) genbutsu (actual material or product)also known as going to the gemba. Example-Siena chief engineer drives in 50 states, 13 provinces and territories and Mexico

Improvements include turning radius, wind stability, drift, cup holders and trays

Common sense will tell you the answer, but collecting data (and then understanding the facts) will tell you whether your common sense was correct. The Ohno circle He asked an engineer to stand and observe an operationfor 8 hours! The Geography of Thought: How Asians and Westerners Think Differently and Why by Richard Nisbett

Westerners see things Easterners see things and relationships Language?

Hourensou- to report, to update periodically, to consult or advise

Genchi genbutsu for executives (coordinated reporting)

Principle 13: Make decisions slowly by consensus, thoroughly considering all options; implement decisions rapidly

Given a year to implement a project

Western typically 3 months planning, 9 months implementing and correcting (Tedds example-in a class exercise, I assign 15 min. to plan and 45 minutes to do. Participants never use the full 15 minutes, even since Ive reinforced the importance of this time.) Toyota typically 10 months planning, pilot, implement flawlessly

1. 2. 3.

Toyota decision making

Find out what is really going on, including genchi genbutsu Understanding underlying causes that explain surface appearances asking Why? five times Broadly considering alternative solutions and developing a detailed rationale for the preferred solution.

What alternatives have you considered? How does this solution compare with those alternatives?

4.

Building consensus within the team, including employees and outside partners.
Nemawashi the process of discussing problems and potential solutions with all those affected, to collect their ideas and get agreement on a path forward. e.g. tollgate review

5.

Using very efficient communication vehicles to do 1-4, preferably one side of one page (e.g. one page 7 step storyboards)

Principle 14: Become a learning organization through relentless reflection (hansei) and continuous improvement (kaizen)
Many people are surprised when I give talks and tell them that Toyota doesnt have a Six Sigma program. Six Sigma is based on complex statistical analysis tools. People want to know how Toyota achieves such high levels of quality without the quality tools of Six Sigma. You can find an example of every Six Sigma tool in use somewhere in Toyota at some time. Yet most problems do not call for complex statistical analysis, but instead require painstaking, detailed problem solving. This requires a level of detailed thinking and analysis that is all too absent from most companies in day-to-day activity. It is a matter of discipline, attitude, and culture. Jeffrey Liker

Principle 14: Become a learning organization through relentless reflection (hansei) and continuous improvement (kaizen)

7 step problem solving method Problem solving is 20% tools and 80% thinking. Hansei loosely reflection or lessons learned

Please do the Hansei. 1. Feel sorry. 2. Create a plan to solve the problem. 3. Sincerely believe you will not make this mistake again. Without Hansei, it is impossible to have kaizen.

Hansei kai reflection meetings

e.g. DMAIC tollgates

No magic metrics Policy Deployment

In Closing
We place the highest value on actual implementation and taking action. Fujio Cho President, Toyota Motor Corporation 2002